Newspaper giant Dow Jones changed its guard yesterday and for the moment, Wall Street applauded the move with a big jump in the stock price.

Peter Kann, the embattled chairman and CEO, is retiring and relinquishing the CEO job to Richard Zannino, the first non-journalist to rise up to the top job at the parent company of the Wall Street Journal.

The market’s reaction was clear as Dow Jones’ shares rocketed $3.65, or 10.2 percent, to close at $39.14 in New York Stock Exchange action.

Kann, 63, will keep the chairman’s title for another year.

Kann would have been forced out by 2007 when he turned 65, the company’s mandatory retirement age.

His wife, Karen Elliott House, the publisher of the Wall Street Journal and a senior vice president at the company, also said she was resigning.

Sources speculated that Zannino had insisted on the resignation of 58-year-old Elliott House as a condition of his accepting the top job.

The Dow Jones board is believed to have been under pressure from shareholders and critics to split the chairman and CEO posts and curb nepotism – hot button issues that have walloped the company’s stock.

“The big question is how does this appointment shake out with the journalists as well as the bean counters,” said Steve Yount, the newly-elected president of the company’s largest union, the Independent Association of Publishing Employees.

“It’s important to maintain this ironclad commitment to the very best in journalism. You don’t want to gut the place simply to save a few dollars.”

There has been speculation that the company could be ripe for a takeover, despite the tight Bancroft family control and an insistence by company executives that the company isn’t for sale.

One source said he expected the new team will have a window of opportunity to fix it up, probably in the 18 months range.

The first appointment will be to find someone to replace Elliott House, an executive who was highly unpopular within the Journal’s ranks.

Gordon Crovitz, the president of Dow Jones electronic publishing, is said to be a stronger contender to take the publisher’s job.

“Gordon is smart, diplomatic and well-known on the street,” said Jim Frielich, a former vice president of marketing at the Wall Street Journal and now a partner at investment firm Zelnik Media. “He is a rare combination of editorial yin and business yang.”

The official company line was that Elliott House left by “mutual consent.”

In his own announcement Kann hinted broadly that wasn’t the case. “I obviously regret her impending departure,” he said in his internal memo to employees.

Yesterday, Dow Jones said that its fourth quarter financial results were going to exceed guidance that it had earlier given Wall Street.

But a one-time Journal rival said it would do little to erase a long period of poor investments and decisions in the Kann era, that includes everything from Telerate and Bridge to the ill-fated TV channel WBIS.

“It’s like saying the victim drowned but it was only in six inches of water,” said the one-time rival.

Kann spent $540 million in January 2004 for the former CBS Marketwatch.

Traffic to the site is said to have fallen off dramatically over 2005. At the time of the acquisition, the site had 5 million visitors each month and 250 million page views, according to ComScore Media. Its total number of visitors are under 2.5 million a day and page views are down by one third.

Bad press

A power struggle at Dow Jones and the Wall Street Journal ends with the surprise departures of top dogs Peter Kann and his wife, Karen Elliott House, and the succession next month of insider Rich Zannino.